BEIJING, May 23 (Reuters) – China will allow foreign firms to set up wholly-owned banking and financial leasing companies in the southern metropolis of Shenzhen and financial hub of Shanghai, the cabinet said on Monday. The move is the latest in a series of steps China has taken to open up its economy and financial system to foreign companies, as it seeks to attract more overseas investment and boost its economic growth. The State Council, China’s cabinet, said in a statement on its website that it would allow foreign banks to set up wholly-owned banking operations in Shenzhen and Shanghai. Foreign banks will also be allowed to take majority stakes in joint ventures with Chinese banks in the two cities. The State Council also said it would allow foreign financial leasing companies to set up wholly-owned operations in Shenzhen and Shanghai. Financial leasing is a type of financing in which a company leases assets, such as aircraft or ships, to a customer. The move is likely to be welcomed by foreign banks and financial leasing companies, which have been keen to expand their operations in China. China’s banking sector is the world’s largest, with total assets of $43 trillion at the end of 2021. However, foreign banks have only a small share of the market, with a combined market share of less than 2%. The financial leasing sector is also relatively small, with total assets of just $1.5 trillion at the end of 2021. However, it is growing rapidly, with annual growth of around 15%. The opening up of the banking and financial leasing sectors in Shenzhen and Shanghai is likely to boost competition in the two cities and lead to lower prices for customers. It could also lead to more innovation in the financial sector in China. The State Council also said it would implement a number of other measures to open up the financial sector in Shenzhen and Shanghai. These include allowing foreign companies to set up wholly-owned insurance companies and asset management companies in the two cities. The State Council also said it would allow foreign companies to participate in the clearing and settlement of renminbi in Shenzhen and Shanghai. The renminbi is China’s currency. These measures are likely to be welcomed by foreign financial companies, which have been keen to expand their operations in China. China is the world’s second-largest economy and is home to a growing middle class. This is making it an increasingly attractive market for foreign companies. The opening up of the financial sector in Shenzhen and Shanghai is a positive step for China and is likely to lead to more competition, innovation, and growth in the financial sector..
China’s Shenzhen, Shanghai to Open up Banking, Finance Sectors to Foreign Firms
